The idea is among those being considered by a Senate inquiry into the retirement system, which is also looking at ways to boost home ownership.
The committee’s chair Andrew Bragg (pictured below), also the shadow assistant minister for home ownership, said the key determinant for success in retirement is home ownership, not super balances.
“Giving subsidies to foreign fund managers and big super funds won’t increase home ownership,” Senator Bragg said.
“It will only place home ownership out of reach for a generation of Australians.”
One proposal the inquiry will consider is how super could provide more support to homeowners during the life of a mortgage, including having super paid into hybrid “super/mortgage offset accounts”.
While providing little detail of the proposal, Senator Bragg has questioned why people are forced to pay interest to banks if their own money could have discharged their mortgages earlier.
New twist on opposition housing policy
The Coalition’s super-for-housing policy, taken to the 2022 federal election, called for Australians to be able to withdraw $50,000 from their super to buy a home.
Under the opposition’s revamped housing policy, that amount would be increased in line with skyrocketing property values around the country.
New CoreLogic figures, released on Friday, show the national median property value has jumped another $63,000 to a record $765,762 in the 12 months to February.
CoreLogic’s Home Value Index has risen another 8.9% over that time, with homes at the cheaper end generally showing much stronger growth rates than the upper end of the market.
Senator Bragg told The Guardian newspaper, given the average deposit for a home in Sydney is around $150,000, it was “a big thing” to deny a young person with $90,000 in their super account access to the funds.
“Because in the absence of the bank of mum and dad, a lot of these people will never be able to get into the housing market,” he said.
He dismissed research which found allowing first homebuyers access to super would further escalate house prices as “exaggerated”.
Super industry fights back
In modelling released last week, a superannuation industry group claimed the scheme would see property values rise by around $75,000 across Australia’s five largest capital cities, pushing up median prices by an estimated 9%.
The Super Members Council, representing the ‘big eight’ industry super funds, has warned against policy ideas that encourage people to raid their retirement savings.
It said “breaking the seal” on super leaves people poorer in retirement and ultimately costs Australian taxpayers more in higher age pension costs.
Its latest analysis, released last week, shows a 30-year-old couple who withdraw $35,000 each from their super funds could retire with about $195,000 less in today’s dollars.
Earlier review warns against super-for-housing
In 2020, the Callaghan Review into Retirement Income, carried out under the Morrison government, identified home ownership as a major factor in a comfortable retirement.
At the time, former Treasury official Mike Callaghan said he did not think younger people should have access to their super for a house deposit.
“Solving the problem of helping first homeowners get into housing is not going to be solved by tweaks to the superannuation system” he said.
“It’s not going to achieve its objective at all, as many people say, it’s likely to just add extra pressure to house prices and there is a cost, this very significant cost to the individual of letting them access superannuation.”
New review for new times
But Senator Bragg is unrepentant, saying expecting Australians to rent in retirement “will rob them of the quality of life they deserve”.
Senator Bragg pointed out many Australians were getting to preservation age and using their super to pay down their mortgages.
He said any changes the Senate inquiry was considering would “naturally” need to be accompanied by serious housing supply reforms.
The Senate inquiry into the retirement system has been extended for another 12 months to June 2025 with expanded terms of reference.
Senator Bragg said the extension will give the Senate time to develop alternative directions on home ownership that “reward aspiration”.
Main image by Andrew Neel on Unsplash
In text image supplied by Parliament of Australia
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